Ford is getting closer to buyers but tells dealers not to worry

Ford Motor Co. had a year to remember in 1999. Like most of the world's vehicle manu-facturers, it sold more cars and trucks than ever before.Add to that the following highlights:Its giant corporate display at the North American International Auto Show in Detroit, which upstaged GM.The trials and tribulations of the Ford Collections, Ford's foray into automotive retailing.Its Internet joint venture

Ford Motor Co. had a year to remember in 1999. Like most of the world's vehicle manu-facturers, it sold more cars and trucks than ever before.

Add to that the following highlights:

Its giant corporate display at the North American International Auto Show in Detroit, which upstaged GM.

The trials and tribulations of the Ford Collections, Ford's foray into automotive retailing.

Its Internet joint venture with Microsoft.

Its entry into the recycling and tire businesses.

Ford is trying to be more consumer-focused. To do that, executives say they need to improve, and in some cases, initiate more direct communication with buyers and potential buyers.

"Month by month we've been moving forward, at least from the marketing and sales and service perspective, with advancing our plans to really deliver on this mission of being a consumer company," says Robert L. Rewey, Ford's group vice president of marketing, sales and service.

Dealers view Ford's customer interfacing skeptically. Many dealers perceive the manufacturer's attempt to get closer to the consumer as a turf invasion.

"This is not a scheme by Ford to undermine the dealers," explains Ford President and CEO Jacques Nasser. "Quite the contrary. We want to take the initiative to enhance the traditional dealer distribution system. I think the dealers should embrace the changes, in particular, the Internet and the very favorable impact it could have on their business."

Dealers, however, cite record sales and profits in 1999 as proof that the business model in place is one that still works. So, why mess with it?

"The market is in a huge transition, driven by the consumer," says Mr. Rewey. "You've got technology coming into play. And you've got this new breed of consumer (Echo Boomers) that's coming in, and there's so many of them.

"You can't ignore everything else that's going on in the world," he continues. "Come the day when the industry isn't as robust as it is today, some of the trends that are hidden by what's going on today will become much more apparent."

In other words, Ford is using the resources generated by this strong market to prepare for days that might not be so robust.

Perhaps this Ford message hasn't been communicated to its dealer body as well as it could have been in 1999.

Perhaps it's a message that dealers just don't want to hear.

Either way, times are changing and Ford intends to stay ahead of the game. In 1999, it made a lot of moves to do just that.

Among them:

* It continued to refine its Ford Retail Network concept by calling them "Collections." It says it still is learning from what Vice President Ross Roberts called retail "experiments." Law suits in Florida and Illinois and other issues, however, gave the company cause to slow down its acquisition strategy.

* It acquired Volvo and created the Premiere Automotive Group, which oversees Lincoln Mercury, Jaguar, Volvo and Aston Martin.

* It initiated a parts department upgrade for its dealerships. Ford says it will refund the nearly $30,000 cost of the program if it fails to improve their parts business.

* Ford started a new program called "Around the Wheel," in which their dealers sell replacement Michelin, Goodyear, Firestone and Continental brand tires.

* It entered the all-makes-and-models auto parts recycling business by buying a company in Tampa, FL, to "interact with customers and service their needs more directly," even when they're not getting repairs done at dealerships. Other acquisitions are made and Ford expects to make the operation a Fortune 1,000-sized company.

* Ford changed its dealer preview of new models from a traditional "dog-and-pony-show" format to one that is more interactive.

* The manufacturer joined forces with Microsoft to develop an on-line build-to-order system that is expected to link consumer order configurations directly with Ford's supply and delivery system.

"The situation is inevitable; consumers are now in charge," states Mr. Nasser. "They're in charge because of new technology and the transparency and information that the Internet allowed them to have.

"And you know something, that's great. I think it forces all of us to change for the better and I also think it's one of the reasons the industry is so buoyant."

- Drew Winter contributed to this report.

Ford Motor Co. President and CEO Jacques Nasser spent time at the Wayne (MI) Assembly Plant putting together wiring harnesses.

That experience gave him a new perspective, and ended up in an improved wiring harness design.

"God, that was the toughest job," recalls Mr. Nasser. "We actually re-designed the wiring harness after that because it was so difficult to do. I felt like a big dummy. I just couldn't do it."

He goes on to explain that he observed a 20-year plant veteran who had built his own tool for installing a door train because that task was so difficult.

"The next day we had the engineers down on the line re-designing the door train," says Mr. Nasser.

As Ford continues its quest to be more of a consumer-focused company, perhaps Mr. Nasser and some of the other top executives should spend a day selling cars.

When Ford Motor Co.'s Lincoln Mercury Division moved to Irvine, CA two years ago, it was making more than a statement of independence from the parent company in Dearborn, MI.

It was moving to a location noted for its entrepreneurial spirit and creative thinking. This spring, the division will break ground on a permanent headquarters in southern California.

The change of scenery and a booming auto industry has been good to Lincoln Mercury in 1999.

Through October, Lincoln Mercury's combined car and truck sales were 520,484 units. Lincoln retail sales were up 4% over 1998. Mercury car sales were up 8% and truck sales were up 9%.

During the year, Lincoln became part of Ford's new Premier Automotive Group, which also includes Volvo, Jaguar and Aston Martin. That elite group will focus on luxury automotive growth with targeted annual sales of 1 million.

The high-performance Cougar S is the only announced new product from Lincoln Mercury for 2000. It has a 2.5-liter V-6 that generates 200-hp and has a unique suspension optimized for agile handling.

Expect announcements of more new products next month at the 2000 auto show in Los Angeles, not far from Lincoln Mercury's new digs.

You'd be hard-pressed to hear Jim O'Connor complaining about anything these days. Life is pretty good for the president of the Ford Division.

1999 will mark the eighth straight year that Ford is America's best-selling brand of cars with 930,647 sales through October. It will be the 14th consecutive year that the blue oval will boast the best-selling brand of trucks with 1,961,586 units sold through October.

"In my 35 years, it was the strongest industry year that I've ever participated in," beams Mr. O'Connor. "Our products were well received. We'll have record sales."

Dealer profits also will hit record levels in 1999, up 21% over 1998.

The F-Series pickup, which has been Ford's MVP for 23 years, continued to lead the way for Ford.

"The big producer was F Series, but the real pleasant surprise is the continuous acceptance of our SUVs," says Mr. O'Connor, referring to a market that now has about 40 offerings from all automakers.

On the car side, Mr. O'Connor is excited about the all-new Ford Focus, an entry level vehicle aimed at the younger set.

"The Focus is going to re-define the small-car market," says Mr. O'Connor.

The company already has 125,000 orders for it. Dealers have sold close to 20,000 sedans. Three-door and wagon versions are on the way from a plant with a capacity of 350,000.

Small as the compact Focus is, "it's a very, very big car for us," says Mr. O'Connor.

The Focus will ultimately replace the Escort. Mr. O'Connor says Escort sales (which were 325,000 in 1999) will go down to about 100,000. "It's a major de-emphasizing," he says.

A bevy of new Ford trucks, designated 2001 models, will be available early in 2000. They include the F- 150 Super Crew, Harley Davidson F-Series, the two-door Explorer Sport and the hybrid SUV-pickup Explorer Sport Trac.

Although the good times should continue to roll for Ford dealers, Mr. O'Connor says the changes they have been seeing recently are going to continue.

"I think there's been a lot of change in the industry in the last three to four years, probably more than the retailers have seen in the last 50," he says. "The Internet seems to have impacted a lot in the last 12 months. That will only accelerate.

"People will be better informed when they come in and we have to have better training," he advises.

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